Garnaut: CET may be useless without higher emission targets

Leading economist professor Ross Garnaut says the clean energy target recommended by the Finkel Review could be useless in meeting current emission reduction targets, because technology change and coal retirements will get us there in any case.

Instead, Garnaut recommends a two-path strategy that he says could resolve the political impasse. One is a lowest-common denominator that leads to the current target, while the second is a higher-ambition Paris target that is adopted if the first pathway demonstrates that wholesale prices will fall.

And Garnaut is convinced they will fall, because of the growing impact of wind and solar power, and on the falling cost of renewable energy, and of battery storage and other technologies necessary to “firm” their output.

“Is the Clean Energy target, or some alternative means promoting energy necessary at all. Is it likely to have any effect at all? Is the debate much ado about nothing?” Garnaut asked in a public lecture on Monday ttitled Energy Security, Reducing Energy Costs and Mitigating Climate Change: Does Finkel Solve the Trilemma?, 

“It is possible that continued cost reductions would cause the emissions reduction target modelled for the Review to be met without assistance from the CET,” he said.

“If that were to eventuate, the clean energy certificates would have no value, and the Clean Energy Certificates no role.”

Garnaut says Australia’s rich renewable energy resources could mean that Australia will emerge as the developed country with the lowest electricity costs, rather than the highest than it has now.

“We have the opportunity to be the energy superpower of the low-carbon world economy,” Garnaut says. “Wholesale electricity prices could be lowered not just from current levels, “but to prices that are notably low by global standards.”

Garnaut says it is clear that new build renewable energy in cheaper and new build coal, and much cheaper than gas, and thatstorage costs would likely also fall much further than modelled by the Finkel Review.

He also noted that the increasing intensity of extreme weather events and cyber insecurity are making the old centralised systems more vulnerable.

And while Garnaut says the Finkel Review  deserves much praise, particularly in its focus on energy security issues and its decision to leave the implementation in the hands of the Australian Energy Market Operator – its weakness was the failure to take into account the Paris climate targets.

That meant that its proposed baseline for emissions intensity did not differentiate between brown coal and black coal.

So instead Garnaut suggests that rather than trying to find away across the impossible divide to ideological and vested interests – which he says is a small proportion of the Australian community – support should be sought around two alternative trajectories for emission cuts, and allow the cost of electricity to determine which is followed.